Condos, Townhouses, Patio Homes… What the Heck is the Difference?
We told you previously some of the reasons why condos, townhomes, and patio homes can be great real estate investments in Phoenix and other Arizona regional areas right now. But these descriptions can sometimes be confusing. In fact, many people don’t know the difference between these property types. In the interest of helping the real estate investor be as knowledgeable as possible, let’s take a look at what each of these terms mean legally, and what they mean in a real estate listing.
Condominiums are much like apartments, where other units may be above you, below you, or to either side. A condo owner is legally considered to own the property consisting of the walls in. In addition, the owner also has a proportional share ownership of the common areas of the complex, based on how many units are present. For example, in a 100-unit condo complex, the owner holds a 1/100 share of the common area in addition to his own unit. Condo ownership comes with no land rights and no airspace rights above. Parking is typically not attached to the property (although in some cases it is), but assigned to the unit and a part of the legal ownership structure.
In a townhome, the owner typically owns the land below and the airspace above the unit, in addition to a percentage ownership of common area. In essence, no one has the right to build above or below your unit, unlike the rights to a condominium. Although most people consider a townhouse to be two or more stories, that is not always the case. A property may legally be considered a townhome even if it is a single-story property. Townhomes typically share common walls to either side with other units but never above or below. Parking may be attached to the unit or it may be assigned somewhere on the property.
Patio homes are very much like townhomes except they often do not share common walls with other units, or sometimes only one wall. These are constructed much like free-standing homes, but typically very close together or connected in a limited manner. Parking is usually a part of the unit itself, not common on the property. Also like a townhome or condo, patio home ownership comes with a percentage share ownership of the common areas of the development. Whenever there are common areas, whether the property is condo, townhouse, or patio home, there will be a homeowners association (HOA). The HOA is in place to oversee the care and maintenance of common areas and to maintain the value of the
properties located within it. This is a complex subject with many legal implications for the investor, so extra care and due diligence are required.
In the Arizona Regional MLS (ARMLS) system, agents often list properties in ways that don’t necessarily correlate with the true legal definitions. Often this is because the property owner prefers a terminology that is confusing, or simply doesn’t understand the difference. This is yet another reason why it is critical to have an experienced, licensed agent or broker represent you. It is the responsibility of the buyer to verify all details of a real estate listing and for purposes of insurance coverage and other issues of significant financial impact, the investor must understand exactly what he is buying. Never rely on the information in a listing because, even though it is deemed reliable, “buyer beware” always applies.
The descriptions above are general, informational guidelines. The legal definition of any property type varies depending on the location and the specific deed restrictions of the property. Always consult a real estate lawyer for advice, in addition to your licensed agent. We can’t emphasize enough how important this is for the investor.
Some other terms you may hear or see in MLS online listings are Gemini or twin home, loft, coop, or apartment home. We will describe these
unusual property types in a future article.
NOTE: We pride ourselves on bringing you the most informative, up-to-date, and accurate information possible about the often-confusing world of real estate investing. Nothing we post however is intended to be taken as investment, real estate, or legal advice. You should always contact a licensed investment, real estate, or legal professional for information and advice about your own unique investment scenarios. Artisan Real Estate Group is one of the top boutique real estate firms in Arizona. We provide an end-to-end suite of services to our investor clients, including a full range of residential and commercial real estate services, income property location service, investor services, property remodeling, restoration, and rehabilitation, real estate finance consultation, REO and bank-owned property services, trustee sale consultation and bidding representation, and new home builder services. Our international team specializes in helping investors from all over the world with their Arizona
real estate transactions. Our goal is to find the best properties with the highest cap rate and ROI for our investor clients. Contact us today to find out how we can help you grow your personal wealth and investment portfolio. Artisan Real Estate Group, http://www.artisanrealestategroup.com/ or call us at (602)644-1280. Email: email@example.com